USAA reverses course on seizing federal stimulus checks

Most of USAA’s employees will continue to work from home through until Sept. 1, though about 1,000 across its four campuses will begin to return to the office next month under a “pilot program.” Pictured is the USAA headquarters building, with downtown San Antonio in the background, as seen in a 2018 aerial photo.

“This will allow members access to their full stimulus payment to help cover the costs of rent, food and other important necessities,” USAA spokesman Matthew Hartwig said in an email.

USAA also is working on “the best solution” for members whose stimulus check was used to pay off any delinquent loan balances, he said.

The initial policy quickly turned into a debacle for USAA, which provides insurance, banking and financial services. It has about 13 million members, comprised of current and former members of the military.

The American Prospect article reported USAA took $3,400 in CARES Act payments from the family of a disabled veteran to offset an existing debt.

The wife of the veteran told the publication she is out of work and he is injured and can’t work. She planned to use the money to pay rent and help her daughter purchase medication.

The woman added that a USAA representative told her in a phone conversation that they “shouldn’t have gotten into debt in the first place.” The representative would not return the $3,400 payment, The American Prospect reported.

The American Prospect cited text messages from other USAA customers who shared similar experiences.

“Currently, a stimulus payment could be reduced when we execute legal garnishment or lien requirements,” USAA’s Hartwig told the New York Times. “A reduction can also occur in circumstances when the stimulus payment is deposited into an account with a negative balance.”

USAA is “continuing to examine ways to address such occurrences during this pandemic,” he added.

Many took to Twitter to criticize USAA for its harsh stance during a national emergency.

“I’ve been a @USAA customer and member for decades, and this makes me absolutely ill,” wrote Constantine Singer. “#USAA, pull yourself together, get your hand out of your members’ accounts, and fulfill your damn mission to support vets and families.”

“It doesn't look like @USAA takes care of the military personnel, the way that they claim. Shameful.” tweeted Lauren Girard.

USAA officials were listening. Today, Hartwig said USAA was working on offering solutions to help members make ends meet during the pandemic.

“These extraordinary times create previously unthinkable challenges,” he said. “Our commitment to military family, employees and our communities is to do what we can to help.”

Some 80 million Americans were expected to receive their checks from the Treasury Department by Wednesday. The checks, part of the $2 trillion CARES Act, are meant to give the people much-needed relief and provide a boost to the economy during the coronavirus pandemic.

Treasury officials told bank compliance officers last week that nothing in the law prevented banks from using the payments to offset a charged-off account with overdraft fees and other debts, The American Prospect reported.

Hartwig said USAA would be supportive of “legislative or administrative action to exempt such future payments from these legal requirements.”

Some lawmakers, including Democratic Sen. Elizabeth Warren of Massachusetts, sent letters to banking associations urging them to tell members not to use CARES Act payments to offset debts.

“While Treasury has refused to follow congressional intent, that does not give banks license to steal the stimulus payments from customers,” the letter stated.

USAA Bank had about $88.8 billion in assets at the end of last year, making it the 33rd largest bank in the U.S., according to USBankLocations.com.

Even though Treasury has given the go-ahead for banks to seize the checks, some have indicated they will not immediately do so.

Wells Fargo told The American Prospect the bank is pausing for 30 days the collection of negative balances existing when the stimulus payments are deposited. The publication noted that the money likely would have to be spent or transferred with a month to avoid the bank taking it to cover a debt.

USAA and the USAA Foundation previously announced they have donated $4.4 million to military nonprofits, local food banks, blood donation centers, shelters and other organizations in response to the pandemic.

Last week, USAA said its auto insurance customers will receive a 20 percent credit on two months of premiums in the coming weeks because of a decline in driving during the pandemic. That amounts to a $520 million benefit to members.